How To Use Foursquare Effectively For Your Small Business

This has got to be about the last thing small-business owners need: a game where customers use their smartphones to “check in” at your businesswhen they’re nearby and post their thoughts about your offerings.

And--get ready for it--whoever checks in the most is crowned “mayor” of your shop.

That’s the concept of white-hot location-based social networking app Foursquare , created by New York-based Foursquare Labs.

Though it sounds like a particularly bizarre detour on the high-tech highway, consider this: 140 million smartphones--each capable of generating remarkably accurate positions--will be roaming North America, and your business, as soon as 2014, according to international market research firm Frost & Sullivan.

Location-based services are expected to morph into a $1.4 billion market by the same year. And Foursquare, whose membership soared from 1 million at the end of March to 1.8 million as of mid-August, has grabbed the pole position in this brisk market.

Foursquare offers instant discounts--just like the ones many businesses place in the Penny Saver or in the Yellow Pages--to customers who are not only interested in your business, but who are physically near your business. And, at least to start, you can try the service at no charge.

“I’ve been dubious about Facebook and Twitter, but the ability to offer a legitimate discount for consumers who participate in this program offers value,” says James Brehm, senior consultant for Frost & Sullivan. “This is a real differentiator.”

Foursquare was one of several location-based bar games that sprang up as GPS chips crept into smartphones; Mountain View, Calif.-based Loopt and Austin, Texas-based Gowalla were other early leaders. Players would use their portable devices to tell friends their whereabouts by “checking in” from various locations throughout the night.

Beyond the meet-up opportunities location-based games afforded, those who checked in the most could win virtual prizes or badges. From those roots have grown applications that have as much game for businesses as for players: When users check in, they are encouraged to give an inside scoop about a business--not “good burgers,” but “it’s not on the menu, but if you ask, they’ll put grilled green onions and Gruyère cheese on your burger for no extra charge.”

Friends who are nearby at the time, and those in the area later, see those tips and are encouraged to give their own recommendations about that business along with nearby places to eat, shop and see. And Foursquare turned these game mechanics into a viable marketing platform that even tiny, technophobe enterprises can harness.

“ Foursquare’s biggest asset at the moment is simplicity,” says Bill Manos, co-founder of FavRav, a New York-based mobile application company. Foursquare is easy to use, and there’s basically no barrier to entry. And it all supports a platform that lets any business compete with Web 2.0 giants like Facebook and Twitter, Manos says.